Supreme Court holds Education Cess not Allowable as Expenditure u/s 40(a)(ii) as amended retrospectively in Budget 2022

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By Manu Sharma A S – On December 17, 2022 6:36 am

The Supreme Court has held the education cess paid to be not allowable as expenditure under Section 40(a)(ii) of the Income Tax Act, 1961 amended retrospectively vide Finance Act, 2022.

The two-judge Bench of Justice Sanjiv Khanna and Justice M M Sundresh observed that “in view of the amendment vide the Finance Act, 2022 with retrospective effect from 01.04.2005 to Section 40(a) (ii) of the Income Tax Act, 1961, the present appeal has to be allowed.” and allowed the appeal of the Revenue in M/s Chambal Fertilizers & Chemicals Ltd v. JCIT-2, Kota.

It was also pointed out that, the Education cess paid by the respondent-assessee would not be allowed as an expenditure under Section 37 read with Section 40(a)(ii) of the Income Tax Act, 1961.

The representative of the assessee submitted that the applicable tax was paid on disallowance.To Read the full text of the Order CLICK HERE

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JOINT COMMISSIONER OF INCOME TAX vs M/S. CHAMBAL FERTILISERS & CHEMICALS LIMITED

CITATION:   2022 TAXSCAN (SC) 212

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Topics

Budget 2022Education CessFinance Act 2022section 40(a)(ii) of the Income Tax ActSupreme Court